Metropolis Report

The Secret Life of Clothing Bins

We have all seen them before, though we may not be able to
recall exactly where. Maybe it was at one of those gas stations along a rural
road or outside a Walmart or a mini-market in the neighborhood. They are
clothing donation bins, sturdy steel containers with flip-down doors.

They are the places you put bags of clothing -- the ones
left over after cleaning the closet or overstuffed dresser drawers. Too old, out-of-fashion, doesn't fit? Why not
be charitable and donate what you no longer want or need? Maybe someone else
can use them.

Once you unload your bags into those steel boxes have you
ever wondered where those old shoes, belts and clothes go?

The answers will surprise you.

To begin with, many of these bins are not -- repeat not -- run by charities.

Legitimate nonprofits do have collection bins out there,
all clearly marked with familiar names: Goodwill, the Salvation Army, and the
St. Vincent de Paul Society. But, they
are in the minority these days.

Many of the bins are owned by businesses, which resell the
used clothing, usually to overseas markets, and pocket the profit. One of the largest for-profits, called
USAgain (pronounced Use-Again) has 10,000 bins in 17 states -- including Pennsylvania -- and collects 60 million pounds of
clothing, shoes and other textiles a year. USAgain touts itself on its web page
and in its publicity as a "green" company that helps in the vital
role of recycling.

Another 10,000 bins nationwide are operated by Planet Aid,
which has been granted nonprofit status as a charity by the IRS. Planet Aid says it uses the money it makes
from the 100

million pounds of textiles it collects each year to fund aid
programs in such African nations as Botswana and Mozambique. The organization, which has a local office in
Hatboro, has been criticized by charity-watch organizations for its high
overhead, with only 30 cents on every dollar going to its aid program.

Unlike Goodwill and the other traditional charities involved
in collection, none of the clothing gathered by USAgain, Planet Aid and other
for-profit operators goes to help needy people in the localities where the
boxes are placed.

According
to Planet Aid's Public Relations Manager Tammy Sproules, once the clothing is
picked up from a donation bin, it gets shipped to one of 14 warehouses
throughout the country. And from there?

USAgain and Planet Aid have been linked to a mysterious
Danish group, known variously as the Teachers Group and Tvind. The Danish group has been
the subject of investigations and prosecution by the Danish government, which
alleges it is a multimillion dollar international business masquerading as a
humanitarian organization.

The leader of the group is a man named Mogens Amdi Petersen,
a mysterious figure, who is said to have near cult-like status within the
organization. He was a founder of the group in 1970. Its original mission was to run alternative
schools in Denmark. (Tvind was the name of the first such school.) It later expanded, prosecutors said, to become a global
business operation.

In 2002, the Danish government brought charges against
Petersen and other associates, alleging that Tvind set up phony companies to collect grant
money, and that the upper management (referred to as the Teachers Group)
embezzled most of it for their own gain.

Peterson
dropped out of sight early in 1980. In 2002, though, he was arrested at the Los
Angeles airport by FBI agents acting on an arrest warrant issued by Interpol at
the behest of the Danish government.

After
his extradition, Petersen and seven other members of the Teachers Group were
tried in Denmark for tax evasion and embezzlement. Out of the eight, seven
(including Petersen) were acquitted. Only Sten Byrner, a financial director
within Tvind, was found guilty of fraud. Prosecutors immediately announced they
would appeal the verdict to a higher court, but Peterson and the others fled
before the courts could take action. Poul Jørgensen, a high-ranking member of
the Teachers Group, was later found in Denmark. He was retried and found
guilty. In 2009, he was sentenced to a two-and-a-half years in prison. The others who fled are believed to be in
other countries, including Mexico, which has no extradition
agreement with Denmark.

After the Peterson arrest and the Danish trial, questions
were raised about links between between Planet Aid and Tvind. The Boston Globe
reported that Ester Neltrup, the general manager of Planet Aid, along with
members of the group's board, were members of the Teachers Group, but Neltrup
denied any ties to Peterson. "He has nothing to do with Planet Aid,"
Neltrup told the Globe, "and his situation has no consequences for Planet
Aid."

Yet, as the Globe reported, three of Planet Aid's board
members, including Neltrup, submitted affidavits in support of Peterson during
his U.S.
extradition proceedings.

There
are two other documents that associate Planet Aid with Tvind.

The
first is the mention of Planet Aid in an FBI memo obtained by www.tvindalert.com, a Tvind watchdog site created by British and European
journalists to monitor the organization.

That
document between the legal attaché in Copenhagen and the FBI Investigative
Service in Miami, where Petersen had been living, states, "...TVIND derives
income from the creation of Developmental Aid Organizations. Money is raised by
the collection of used clothes. The clothes are recycled and sold in third
world Countries. The proceeds are sent to Charitable trust funds established in
Off Shore tax havens. A number of these groups are operating in the United
States. They include: UFF, Development Aid from People to People, Humana People
to People, Institute of International Cooperation and Development, and Planet
Aid."

In
another document provided by the same website, Denmark's prosecutors of the
case against Tvind mention Planet Aid. It cites an email exchange among three
of the defendants in the Tvind case that involve shifting money among various
Tvind satellite organizations and mentions Planet Aid and GAIA, another
clothing collection non-profit based on the west coast.

The
same FBI and Danish documents also mention the for-profit USAgain as being a
part of the Tvind empire. The Danish prosecutors' document states: "The police
material demonstrates that [Teachers Group] activities in the period 1992-2001
had expanded far beyond pure school activities. In 1992, the organization had
the following productive activities:... In the United States the clothes are
collected under the name of 'USAgain.' "

In an interview with KIRO 7 TV
news in Seattle, Mattias
Wallander, president and CEO of USAgain, admitted he was a member of
the Teachers Group but separated himself from the legal issues in Denmark and said it was a
"personal choice" that did not affect USAgain.

"We are not associated with any organization in Denmark,
and if anyone is accused of wrongdoing in Denmark it doesn't have anything to
do with USAgain....," Wallander told the TV reporter.

Yet, in
2009 when KIRO News investigated the Chicago-based company, it identified the Caribbean-based investment group Fairbank, Cooper and Lyle as a majority
stakeholder of USAgain. KIRO reported that European court documents showed that
the investment firm controlled most of the Teachers Group finances.

When asked by Metropolis, Scott Burnham, a representative of
the public relations firm that represents USAgain, declined to discuss who owns
the company. In an email reply, Burnham
wrote: "USAgain is a
private, independently owned company incorporated in Delaware and registered to
do business in PA."

In
addition to the Tvind issue, Planet Aid has come under criticism for spending
too much on its operations and not enough on direct aid.

When
the independent, nonprofit group CharityWatch looked over Planet Aid's 2011
990 tax form, it didn't like what it saw. According to CharityWatch's
website: "This charity consistently reports low overhead and high program
spending in its annual financial documents, but a closer analysis by
CharityWatch reveals a different picture of how efficiently Planet Aid is
operating. Planet Aid reports spending 84% of its expenses on programs in 2011. CharityWatch's analysis of Planet Aid's 2011 tax form and audited financial
statements shows the charity spending only 29% of its expenses on programs."

In the
same way, the for-profit USAgain has been criticized for giving the impression
that it donates some of its proceeds to local organizations that participate in
the clothing collection program, but offers few specifics about who gets those donations
and how much.

USAgain's
website states: "A portion of the proceeds generated by each bin benefits the
host or a charity of the host's choice."

When
asked for specifics, USAgain spokesman Scott Burnham said "more than a thousand organizations -- including schools, churches, food banks, hospitals, fire
stations, humane societies and youth groups -- receive funds as a part of
USAgain's charitable giving program." Pressed
for specifics, Burnham cited only one example: USAgain, he said, had
given $35,000

to the Children's Miracle Network in the first nine months of this year.

As
clothing bins have sprung up around the country, local governments are wrestling
with how to treat them, especially since they are seen as competition for
charities, such as the Salvation Army, which also have clothing bins. Local media have also reported complaints
that some of these clothing collectors portray themselves as nonprofits when
they are not.

USAgain
is clear -- in its literature and on its bins -- that it is a for-profit. Planet Aid is a nonprofit and states that on
its bins. Both also state that the
clothing they collect is not resold locally. Most of what they collect is resold overseas, with lighter clothing
going to Africa and bulkier clothes, such as coats, resold in Eastern Europe.

This is
in contrast to longtime charities such as Goodwill, the Salvation Army and St.
Vincent de Paul.

St. Vincent de Paul's website lists 23 bins in the region.
Goodwill maintains between 50 and 75 boxes in their area. The Salvation Army
does not track the number of donation boxes it has throughout the country.
Each organization also encourages drop-off of donations at their local and
regional centers. People who donate clothing to a nonprofit can take a
charitable deduction for it. They cannot
for giving to for-profit operations.

"What I would want the public to
be aware of is that when they are making a donation of their material goods, they
have an opportunity to make a difference in their community. And I think that
should be one of the factors they consider when they donate," says Mark Boyd,
CEO of Goodwill Industries of Southern New Jersey and Philadelphia.

Goodwill's mission is to help
people with disabilities and disadvantages realize their economic potential via
a job. To achieve this, Goodwill runs various programs locally to create
employment opportunities, give the disadvantaged training opportunities, and
assist with job placement services. The programs range from a GED program,
computer skills classes, resume assistance, and helping people with interview
skills. They hold workshops for ex-offenders to try and give them the skills
necessary to become employable, and assist in job placement. Goodwill has also
started its own temp agency and an unarmed security guard company, perfect for
veterans returning from war.

Boyd estimates that roughly 80
percent of the funding for these programs comes from goods donated to Goodwill.
Another 15 percent comes from contracts with industry. For example, a contract
with Comcast gives those in the ex-offender program a job repairing broken
remote controls. Less than four percent of its $30 million budget this year
comes from government sources. Locally, Goodwill employees about 800 people.

In addition to the revenue
generated from local donations staying in the area, the clothing itself also
stays here. According to Boyd, the process is simple. The donations are
collected, transported to a store and then processed. If it is suitable for
sale at a Goodwill store, it is tagged, hung on a hanger and placed on a rack.
If it is not in a condition to be resold, it is sold to a rag dealer. It is a near 50/50 split between resalable and rag.
The items that are be put out in Goodwill stores were generated locally
and also sold locally.

"If they donate to Goodwill, if
they donate to the Salvation Army, if they donate to St. Vincent de Paul, that
is going to make a difference to the people in their community," said Boyd.
"When they make a donation to an unmarked box, or to someone they have not
heard of, or to Planet Aid, it's not going to stay local. Planet Aid states
basically all their donations are going to Africa, and no one has been able to
track what happens to that donation. Is it real, are these front organizations?
That's not me speaking, that's what the record says."

In the
past several years, many local governments have become aware of these details
and made attempts to bring a heightened awareness to the public.

In
Philadelphia, a bill was introduced by Councilwoman Marian Tasco in 2008 that
would have required a permit for anyone wanting to place a drop-off bin. This
was in response from constituents who felt the boxes weren't being properly
maintained. But, between the time the bill was introduced and when it went to
the Committee on Licensing and Inspections, several things occurred.

First,
when the owners of the donation boxes were contacted, they came out and removed
them. Second was the fact that most of the bins were located on private
property and the owners had, in fact, given permission for them to be placed
there. Then the city realized the dilemma of trying to license and regulate
bins on private property that were there with owners' permission. A clothing
donation box owner must simply follow the City of Philadelphia's Title 9:
Regulation of Businesses, Trades and Professions. According to one city
official, they have had no complaints since.

However,
the story in New Jersey is different. In 2007, the state passed a law that
included provisions that only registered charitable organizations could obtain
a permit to put out a clothing bin, and that each bin must include the owner's
name and the name of any charity or organization that would receive proceeds
from the donations. Goodwill Industries of New Jersey and Philadelphia was a
major proponent of a bill.

So
where do you put that old sweatshirt? At the end of the day it is up to you.
However, the best decisions are made when you have all the information.

As Boyd
put it, "Goodwill is the largest employer of
people with disabilities in the world. We take people with disabilities and
give them a job. In this area, I just want people to know that.

But forget Goodwill," he added. "If
you give that donation to Salvation Army I know exactly what they are going to
do with it. It goes directly to their rehabilitation programs. They help people
with substance abuse issues. And all of their donations that go to their
stores, that's what their stores are dedicated to. Who can complain about that
mission?"